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HomeMy WebLinkAbout07-01-2014 C4 2014-15 Community Promotions Program - TBID & PCCCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number FROM: Michael Codron, Assistant City Manager Prepared By: Molly Cano, Tourism Manager SUBJECT: 2014-15 COMMUNITY PROMOTIONS PROGRAM – TBID & PCC RECOMMENDATION 1. Authorize the City Manager to enter into various contracts for the Tourism Business Improvement District (TBID) not to exceed the 2014-15 program budget of $1,232,774 and based on the recommendations by the TBID Board. 2. Authorize the City Manager to enter into various contracts for Community Promotions not to exceed the 2014-15 program budget of $362, 000 and based on the recommendations by the Promotional Coordinating Committee (PCC). 3. Authorize the City Manager to enter into contracts utilizing the TBID Fund un- appropriated fund balance from the 2013-14 fiscal year for tourism marketing expenditures in 2014-15 and based on the recommendations by the TBID Board. 4. Authorize the City Manager to enter into contracts utilizing the TBID Fund Reserve of $100,000 for tourism marketing expenditures in 2014-15 and based on the recommendations by the TBID Board. 5. As recommended by the Tourism Business Improvement District (TBID) Board, approve the financing of the contract with Zeppelin Technology Inc. for Helium, a new back end hotel booking platform, and authorize the City Manager to execute the agreement in the amount of $135,000, with the carryover of $13,500 from the 2013/14 TBID budget and the remaining $121,500 to be allocated from the 2014/15 TBID budget. DISCUSSION Background With the 2013-15 Financial Plan, the City Council approved the budget and defined the work program for the Community Promotions program and the Tourism Business Improvement District (TBID). Both of these programs are overseen and administered by advisory bodies to the City Council. The Promotional Coordinating Committee makes recommendations regarding the use of Community Promotions funding, and the TBID Board recommends the use of TBID assessment proceeds. Both Boards developed a budget and work program for the 2013-15 Financial Plan, and established recommendations for use of funding in 2014-15 with respective contract considerations. Tourism Business Improvement District In their budget deliberations, the TBID Board considered recommendations from its budget taskforce, a subcommittee of the Board. Recommendations included proposals from the San Luis Obispo Chamber of Commerce, Visit San Luis Obispo County, SLO Wine Country Association, C4 - 1 2014-15 COMMUNITY PROMOTIONS PROGRAM Page 2 and Cal Poly Athletics/Learfield. The Board also considered continued expenditures for the Central Coast Tourism Council membership and the commissioning of the Smith Travel Occupancy reports. The TBID Board recommends that Council authorize the City Manager to enter into separate contracts with the following organizations for the specified programs (Attachment 1 - TBID Minutes, May 14, 2014): • Chamber of Commerce in the amount of $28,000 to further establish a lodging availability and guest conversion program at the Visitors Center • Program funding for Visit San Luis Obispo County in the amount of $105,000, which will include membership for all TBID lodging properties • Continued partnership with SLO Wine Country Association in the amount of $10,000 for inclusive SLO TBID membership, marketing and media outreach 1. Cal Poly Athletics/ Learfield The TBID Board also recommends renewing the partnership with Cal Poly Athletics/Learfield for an additional three-year commitment with an annual sponsorship fee of $35,000 plus 605 complimentary rooms - to be purchased through the TBID – with a value not to exceed $60,500, for a total package of $95,500. Through the previous partnership, the Board established a reimbursement schedule that allocates a specific amount ($100 inclusive) paid per room/ per night. This agreement will continue the exclusivity of San Luis Obispo lodging for all events and teams connected to Cal Poly Athletics with one exception. The football team will continue to lodge its recruits at the Cliffs in Pismo Beach due to the capacity of San Luis Obispo hotels individually and the requirements of the football guests. In addition, for the first time ever, the TBID will partner with Cal Poly Alumni Association and receive the opportunity to promote San Luis Obispo tourism to over 80,000 alumni with active email addresses on file, most of who live in the TBID’s top target markets of Los Angeles and San Francisco. Staff is expected to continue to coordinate between Cal Poly and the hotels. The rooms will be paid in fiscal year 2014-15 and come out of that fiscal year’s assessment revenue (Attachment 2- Cal Poly Athletics Proposal). 2. Zeppelin Technology Inc. - Helium The TBID has dedicated the past five years to the development and promotion of the City’s tourism website – sanluisobispovacations.com – as the major tourism marketing tool for the City and its hotels. Since the site’s inception, the TBID has recognized the need to offer an online reservation tool. Until now the standard industry options did not fit the specific needs of the TBID, and the expense for Rosetta to build a customized solution was not economically viable. As a temporary solution, over the past five years the site has acted as the visitor introduction and then filtered guests to individual hotel sites for reservations. This process not only forces visitors to leave the TBID’s site but also creates more work for the visitor and results in a higher loss of business. With the recent development of the TBID’s five-year strategic plan, the Board prioritized the need to build an integrated booking engine that serves across multiple platforms. C4 - 2 2014-15 COMMUNITY PROMOTIONS PROGRAM Page 3 The TBID Board has identified a unique software booking solution called Helium, developed by Zeppelin Technology company. This technology is not offered by any other provider in the market. It is customizable software that can be designed specifically for SLO TBID’s network to service all types of properties including hotels, motels, bed & breakfast establishments, hostels, and homestay properties. Helium is unlike any other booking platform currently in the market because it meets the specific needs of each subscriber and offers a unique set of features; integration to the TBID site, reporting capabilities, warranty and booking guarantees, knowledge base, and the overall customized platform. This allows for flexibility in digitizing inventory of our properties that would not otherwise be available and gives the TBID the tools to gauge the success of its marketing programs thorough the booking results. The TBID Board unanimously recommends the City Council authorize a sole source contract with Zeppelin Technology for development of the custom booking solution called Helium. The total cost for Helium is $135,000, of which $13,500 would be used from the 2013/14 TBID budget and the remaining $121,500 is to be allocated from the 2014/15 TBID budget. The TBID Board’s marketing agent (Rosetta) has significant experience with online marketing and booking technology, and they confirmed that this unique product cannot be obtained by any other provider and is the best solution for the TBID. Per the Municipal Code, standard bidding procedures may be dispensed with when the item(s) to be purchased can be obtained from only one vendor or supplier (MC3.24.060C), therefore a sole source contract is justified (Attachment 3- Helium agreement). The remaining program funds will be allocated to program expenses and marketing campaigns including involvement in various tradeshows, industry conferences, and event promotion sponsorship. (Attachment 4 – Line Item Budget Allocations). Any un-appropriated fund balance from 2013-14 will be used for marketing programs like event promotion and tradeshow representation. Promotional Coordinating Committee During their March 12, 2014 meeting, the PCC received a proposal from the Chamber of Commerce to continue ongoing contract services for the City that include public relations management, marketing and public relations support of the Grants-in-Aid (GIA) recipients, and the production of the City tear-off-maps. The Chamber requested the opportunity to continue the tourism and community promotions PR services for the City through the PCC, however they encouraged the PCC to consider additional contracting for an outside media monitoring tool beyond what was used in the current year. For the tear-off maps the Chamber requested an additional $500 for a total of $8,000 in FY 14-15 for the production and printing of 150,000 tear- off maps to keep up with the increased demand and traffic through the Visitor Center. During the May 14, 2014 meeting the PCC finalized the 2014-15 budget allocations and continued programmatic approach for GIA funding, event promotions, Visitor Services and beautification. After considerable deliberation, the Committee determined that it was of highest priority to maintain contract services with the Chamber of Commerce and decided to fully fund all of the proposals for the 2014-15 year. The Committee discussed the importance of beginning the contract for the new media monitoring tool as soon as possible in order to capture the media results during the peak travel season so the Committee decided to allocate a portion of the C4 - 3 2014-15 COMMUNITY PROMOTIONS PROGRAM Page 4 remaining 2013-14 budget to the contract of that service. The Committee then discussed the request to carryover the remaining 2013-14 budget for the use of Event and Activities funding to enhance the SLO Happenings event calendar app and/or provide additional non-GIA event sponsorship grants. If this budget carryover is not approved by the City Manager, the Committee will still allocate funds for these purposes in lieu of full support of 2014-15 Beautification Program efforts (Attachment 4– Line Item Budget Allocations & Attachment 5- PCC Minutes May 14, 2014). Joint PCC & TBID Event Promotion Subcommittee Each fiscal year the City invests in destination event sponsorships through the Events Promotion program of the joint TBID and PCC advisory bodies. (This process is entirely separate from the PCC’s grants-in-aid program for non-profit event promotion.) In FY 11-12, in an effort to coordinate the City’s investment in these destination events, both the TBID and PCC elected three members to serve on a joint Events Promotion Subcommittee. The purpose of this subcommittee is to collaborate on the funding decisions, avoid duplication, review the events regarding benefits to the City’s lodging industry and residents, and make funding recommendations to the respective boards. In most cases, the funds awarded provide events with “seed money” to start a new event or develop a new feature of an existing event. Beginning in FY 14-15, the TBID and PCC will implement a new consolidated annual application process through the Events Promotion Subcommittee for events seeking sponsorship funds from the City of San Luis Obispo. The new process is expected to be more efficient for the TBID and PCC, and more fair for applicants seeking City sponsorship for their event. The intent is to launch this new process beginning in FY 2014-15 by establishing an annual application period, once a year, to award sponsorship funding to tourism generating events. With this new process, while the majority of the event partnership funding could be awarded in the annual consideration the committees would reserve the flexibility to award funding outside the process should the additional funds be available within the respective program budgets. From their respective FY 14-15 program budgets, the PCC has earmarked up to $48,000 for event sponsorship grants and the TBID has earmarked $107,500 (Attachment 4– Line Item Budget Allocations). FISCAL IMPACT The total amount currently budgeted in the 2013-15 Financial Plan Supplement for the TBID Fund for 2014-15 is $1,232,774. In addition, the TBID fund will maintain a fund reserve of $100,000. Due to the increase in the transient occupancy tax, the TBID fund balance is expected to increase resulting in an un-appropriated fund balance amount that exceeds the $100,000 level. The exact amount of this excess will not be known until the City’s audited financials for 2013- 14 will be substantially complete, and will be carried over to the next budget year. The total amount currently budgeted in the 2013-15 Financial Plan Supplement for the Community Promotions Program is $388,200 for 2014-15. There is sufficient funding for the contracts as recommended by the two advisory bodies. C4 - 4 2014-15 COMMUNITY PROMOTIONS PROGRAM Page 5 ALTERNATIVES 1. The Council could choose to fund the contracts at different levels or modify the scope of services. The advisory bodies and staff do not recommend adjustments, as the proposed contracts are the result of careful review, discussion, and negotiations between the parties. 2. The Council could direct the advisory bodies and staff to release Request for Proposals for all the services outlined. This is not recommended since the recommended contractors are well positioned to execute the established work scope in a cohesive and economical manner. ATTACHMENTS 1. DRAFT TBID Minutes – May 14, 2014 2. TBID: Cal Poly Athletics Proposal 3. TBID: Zeppelin Technology Inc. Agreement 4. Line Item Budget Allocations 5. DRAFT PCC Minutes – May 14, 2014 AVAILABLE FOR REVIEW IN THE COUNCIL OFFICE 1. Zeppelin Technology presentation to TBID on Helium 2. Rosetta Booking Engine Comparison presentation 3. Proposed Special Event Sponsorship Application t:\council agenda reports\2014\2014-07-01\2014-15 community promotions program (codron-cano)\council agenda report_2014.15.docx C4 - 5 Tourism Business Improvement District Meeting Minutes Wednesday, May 14, 2014 10 am at City Hall CALL TO ORDER: Vice Chair Clint Pearce PRESENT: Pearce, Hutton, Walker, Wilkins STAFF PRESENT: Molly Cano, Tourism Manager; Lee Johnson, Economic Development Manager Call to Order at 10:01 am Public Comment: None. CONSENT AGENDA ACTION: Moved by Hutton/Wilkins to approve the consent agenda. Motion carried 4:0 PROCLAMATIONS/PRESENTATIONS 1. NATIONAL TOURISM WEEK PROCLAMATION Council Member Kathy Smith presented the proclamation from City Council proclaiming May 3-11, 2014 as “NATIONAL TRAVEL & TOURISM WEEK”. 2. VISIT SLO COUNTY QUARTERLY REPORT Paul Sloan from the Visit San Luis Obispo County presented the quarterly report for all activities performed by Visit SLO County. BUSINESS ITEMS 1. 2014-2015 BUDGET The Board established the recommendations to City Council as to 2014-2015 budget allocations. ACTION: Moved by Wilkins/Walker to allocate $105,000 to funding of marketing programs for Visit San Luis Obispo County. That funding level would also include full membership funding for all SLO TBID properties. Motion carried 3:0 Abstention: Pearce ACTION: Moved by Walker/Hutton to fund SLO Chamber of Commerce proposal for phone line and availability tracking service at $28,000. Motion carried 3:0 Abstention: Pearce DRAFT Attachment 1 C4 - 6 Tourism Board Improvement District Minutes Page 2 Page 2 of 2 ACTION: Moved by Pearce/Hutton to fund Cal Poly Athletics/Learfiled partnership agreement for another 3 year term at $$35,000 plus $60,500 for hosting rooms (605 room nights) per year. Motion carried 4:0 ACTION: Moved by Wilkins/Hutton to fund SLO Wine at $10,000 for marketing and partnership programs and to allocate $1000 for hosting media through SLO Wine. Motion carried 4:0 ACTION: Moved by Walker/Wilkins to approve the 2014/15 budget allocations as presented. Motion carried 4:0 2. 2014 TRADESHOW RECAP Staff and Rosetta will present the 2014 Travel & Adventure Show recap for the three events attended. The Board considered the show participation for 2015 at all three Travel & Adventure shows. ACTION: Moved by Hutton/Wilkins to reserve booth space at the three California Travel & Adventure shows for 2015. Motion carried 4:0 COMMITTEE COMMUNICATION HOTELIER UPDATE The hotels commented on the feedback from the property visits. Hutton noted that one property was interested in transportation for graduation weekend. PCC UPDATE Clint Pearce reviewed the minutes with the Board of the PCC’s March meeting. TOURISM PROGRAM UPDATE -Visit California Receptive FAM May 19-24– Wednesday, 5/21 will be in SLO -Media Visit- Thursday journalist working on an article about the mission trail for the SD Union Tribune -Marketing Contract – approved by Council at May 6 meeting -Special Meeting on Monday 5/19 at 10am at City Hall -Cal Poly feasibility study for new hotel and conference center- would like to come present their findings to the TBID at a meeting in the near future -Applications for TBID vacant positions are due Friday at 5pm Meeting adjourned at 10:54 am Attachment 1 C4 - 7 CORPORATE MARKETING PROPOSAL WITH: Attachment 2 C4 - 8 Cal Poly Universe STUDENTS  Over 19,325 Enrolled  Over 8,448 Females  Over 10,837 Males FANS Alumni Parents Trade Customers Sales Force Consumers FACULTY, STAFF & ALUMNI  Over 2,959 Faculty & Staff  Over 117,000 Alumni COLLEGE SPORTS AUDIENCE Attachment 2 C4 - 9 COLLEGE SPORTS AUDIENCE Alumni income 30% above national average. Alumni develop lifelong affinity to their school/sport. Average household income exceeds $100,000. Over 70% of fans own their own homes. Over 69% of fans own two or more cars. Over 30% of fans have children. 50% of fans have attended or graduated from college. Nearly $100 billion a year spent on consumer goods and services by college students. Attachment 2 C4 - 10 Corporate sponsorship of Cal Poly Athletics provides high profile visibility on a year-long basis and a high degree of association with the passion and excitement of college sports. Corporate partnerships deliver effective, impactful marketing opportunities that can increase brand awareness and loyalty, increase store traffic, drive sales, and support community relations initiatives. All partners benefit from the opportunity to reach a well-educated, upper-income demographic with tremendous affinity for their college programs. EXAMPLES In 2006 UCLA Fans were 19% less likely than the National Average to drink Red Bull. Today UCLA Fans are 8% more likely. In 2006 UCLA Fans were 14% more likely to bank at Bank of the West. Today UCLA Fans are 97% more likely. Corporate Partner Program OBJECTIVE Attachment 2 C4 - 11 RADIO COMMERCIALS Share SLO will receive: Six (6) radio spots per game at Cal Poly Football Four (4) spots per game at Cal Poly Men’s Basketball. Six (6) spots per game at Cal Poly Baseball. Two (2) during each Cal Poly Coaches Show. Attachment 2 C4 - 12 VIDEO BOARD RECOGNITION Share SLO’s fifteen (15) second commercial will be played on the Spanos Stadium video board an average two (2) times per football game and two (2) times per soccer match. Attachment 2 C4 - 13 VIDEO BOARD SIGN Share SLO’s will receive one (1) sign on the video board at Spanos Stadium Attachment 2 C4 - 14 VIDEO BOARD EXPOSURE Share SLO will receive logo exposure on the new Mott Gym videoboard, to be installed sometime during the 2014-15 basketball season. Share Slo will have up to four (4) exposures per game as an instant replay sponsor. Attachment 2 C4 - 15 ROTATING SIGN Share SLO will receive one (1) courtside rotating sign at Mott gym during all regular season home Men’s and Women’s Basketball games. Attachment 2 C4 - 16 MOTT GYM SUITE Share SLO’s will receive the suite at Mott Gym for one (1) regular season home Men’s and Women’s Basketball game. Attachment 2 C4 - 17 OUTFIELD SIGN-BAGGETT STADIUM Share SLO will receive one (1) outfield fence sign at Baggett Stadium. Attachment 2 C4 - 18 OUTFIELD SIGN-JANSSEN FIELD Share SLO will receive one (1) outfield fence sign at Janssen Field to be displayed during all regular season home softball games Janssen Field, home of Cal Poly softball has never had outfield fence signs before. Share SLO will be part of a small group of inaugural sponsors to Cal Poly Softball. Attachment 2 C4 - 19 SCOREBOARD SIGN – JANSSEN FIELD Share SLO will receive one (1) scoreboard sign at Janssen Field Attachment 2 C4 - 20 Share SLO will be the presenting sponsor of six games during each Cal Poly baseball season. With this sponsorship Share Slo will receive the following: Tagged in all Cal Poly advertising buys promoting the games. Tagged in all in-house advertising promoting the games. Opportunity to throw out a ceremonial first pitch for one or all of the hotels! PRESENTING SPONSOR OF BASEBALL GAMES Attachment 2 C4 - 21 The Cal Poly Softball Classic will be renamed the Share Slo Softball Classic. This softball showcase features some of the premier teams in the country playing at Janssen Field in San Luis Obispo once per year in February. The Women’s Basketball Thanksgiving Holiday Tournament will be also be renamed the Share Slo Holiday Tournament. This event takes place over the Thanksgiving Holiday and attracts some great women's basketball talent. NAMING RIGHTS OF THE THE CAL POLY EVENTS Attachment 2 C4 - 22 PRINT Share SLO will receive one (1) full page print ad in the Cal Poly football souvenir programs 6,000 souvenir programs are annually printed. Attachment 2 C4 - 23 WEBSITE Share SLO will receive logo recognition on the official Cal Poly Athletics website GoPoly.com Attachment 2 C4 - 24 SOCIAL MEDIA Share SLO will receive a link on monthly email blasts and on the official Facebook page of Cal Poly Athletics. Cal Poly Athletics has a database of approximately 50,000 email subscribers and 20,000 fans/friends on Facebook. The Share SLO message appears on electronic media throughout the year. Attachment 2 C4 - 25 OTHER ASSETS Exclusivity Visiting Team Lists Eight Season Tickets to ALL sports Attachment 2 C4 - 26 CAL POLY ALUMNI ASSOCIATION For the first time under this agreement, Share Slo will also partner with the Cal Poly Alumni Association. The Cal Poly Alumni Association has 80,000 active e-mail addresses. Most of the e- mails belong to alumni living in the Los Angles and San Francisco markets. Share Slo will receive the opportunity to promote a special rate, discount offer, or discount code to Cal Poly alumni via an e-mail blast to 80,000 alumni four times per year. Share Slo will be able to promote a special tourism driving event happening in San Luis Obispo to all 80,000 e-mail addresses two times per year. The specific event is subject to the approval and alcohol policies of Cal Poly University. Attachment 2 C4 - 27 NET ANNUAL INVESTMENT $35,000 AND 605 ROOM NIGHTS AT TBID HOTELS PER YEAR FOR A PERIOD OF 3 YEARS 2014-2017 Attachment 2 C4 - 28 DRAFT 05-21-2014 1 ZEPPELIN INC. MANAGED SERVICES AGREEMENT This Managed Services Agreement (including all attachments and exhibits, herein this “Agreement”) is made and entered into as of ________________, 2014 (“Effective Date”), between Zeppelin Inc. (“Zeppelin”) and the City of San Luis Obispo (“Subscriber”) (each of Zeppelin and Subscriber a “Party” and, collectively, the “Parties”). This Agreement sets forth the terms pursuant to which Zeppelin will provide certain services to Subscriber and Subscriber will be permitted to use certain of Zeppelin’s web-based services. The Parties agree as follows: 1. DEFINITIONS 1.1 “Hosted Services” means the web-based services identified in Exhibit A. 1.2 “Intellectual Property Rights” means all current and future worldwide patents and patent applications (including, without limitation, all reissues, divisions, renewals, extensions, continuations and continuations-in-part), inventions (whether patentable or not), copyrights (including, without limitation, rights in audiovisual works and moral rights), trade secrets, trademarks, service marks, trade names, trade dress and all other intellectual property rights and proprietary right, whether arising under the laws of the United States, or any other country, state or jurisdiction. 1.3 “Professional Services” means the development, integration, implementation, marketing, and other services to be provided by Zeppelin, as described in one or more Statements of Work, but excluding the Hosted Services. 1.4 “Scope Limitations” means the limitations on Subscriber’s use of the Hosted Services specified in Exhibit A. 1.5 “Statement of Work” or “SOW” means any statement of work setting forth details of the Professional Services to be provided by Zeppelin to Subscriber, including the services set forth on Exhibit B and as otherwise mutually agreed between the Parties in the form of a writing signed by both parties and which statement of work will be considered attached to, and subject to the terms and conditions of, this Agreement. The terms of this Agreement shall govern in the event of any conflict between this Agreement and the terms of any SOW. 1.6 “Subscriber Website” means hotel and travel-accommodation booking websites hosted and operated by or on behalf of Subscriber and made publicly available to end users and as agreed by the Parties in writing. 2. PROFESSIONAL SERVICES 2.1 Professional Services. Subject to the terms and conditions of this Agreement, Zeppelin agrees to use commercially reasonable efforts to perform the Professional Services by the dates specified in an applicable Statement of Work. Zeppelin shall determine, upon consultation with Subscriber, the time, place, personnel, methods, details and means of performing the Professional Services. Zeppelin may assign, reassign and substitute personnel of competent and comparable skills at any time and may provide the same or similar services to any other third party. Zeppelin shall furnish Subscriber with every reasonable opportunity for Subscriber to ascertain that the Professional Services are being performed in accordance with the terms and requirements of this Agreement. All work done and services shall be subject to inspection and approval of Subscriber. 2.2 Deliverables; Acceptance. Upon completion of an applicable milestone under a Statement of Work, Zeppelin shall make available to Subscriber the applicable deliverables identified under such Statement of Work. Subscriber shall have ten (10) days from delivery to inspect, test, and evaluate all functions listed on a Statement of Work, or its exhibits or schedules, to verify that the Services are functioning according to their specifications (the “Inspection Period”) reject such deliverables for failure to meet the specifications set forth in the SOW, and shall provide written details as to the specific non-conformities identified by Subscriber. Failure to provide such written rejection notice within ten (10) days of delivery shall be deemed acceptance of such deliverables and/or milestones. Zeppelin shall use reasonable commercial efforts to remedy any non-conformity identified in a rejection notice and resubmit the corrected deliverable, and the Parties shall repeat the procedure set forth in this Section 2.2 for such corrected deliverable. If, after repeated efforts, Zeppelin is unable to remedy the failures to meet specifications of which it has been notified by Subscriber, Subscriber may choose to terminate all or a portion of this Agreement and not accept the Professional Service or Hosted Services. 2.3 Audit. The Subscriber shall have the right to inspect and/or audit all relevant records and other written materials used by Zeppelin in preparing its invoices to the Subscriber (except that Subscriber shall not have the right to access or review sensitive company information or information otherwise relating to Zeppelins’ Intellectual Property). 3. Intellectual Property and Proprietary Rights 3.1 Zeppelin’s Proprietary Rights. This Agreement does not transfer from Zeppelin to Subscriber any rights in any invention, improvement, method, process, software or other works of authorship, or other innovations of any kind, including, without limitation, any improvements or modifications to the Hosted Services (collectively, the “Zeppelin Technology”), and, as between the Parties, all right, title and interest, including all Intellectual Property Rights, in and to all Zeppelin Technology will remain solely with Zeppelin. To the extent that Subscriber may acquire property rights in any Zeppelin Technology, Subscriber hereby assigns to Zeppelin all of its rights, title and interest therein and thereto. 3.2 Subscriber Proprietary Rights; Subscriber Website. Subscriber is the exclusive owner of and retains all right, title and interest in and to the Subscriber Website and all Subscriber Intellectual Property Rights including, Subscriber-specific text, data images, design, structure, graphic images, any audio, video and audiovisual material, trademarks, and other materials on web pages on the Website from which the Services are accessed or which Subscriber provides to Zeppelin for incorporation into any materials developed in connection with the Services, including without limitation all Intellectual Property Rights therein. To the extent that Zeppelin may acquire property rights in any Subscriber Intellectual Property Rights, Zeppelin hereby assigns to Subscriber all of its rights, title and interest therein and thereto. 3.3 Trademarks. Each Party (the “Using Party”) agrees that, with respect to its use of the other Party’s (the “Owning Party”) trademarks, marks and trade names (“Marks”) provided or otherwise identified by the Owning Party for the Using Party’s use: (a) as between the Parties, all rights in and to such Marks are owned by the Owning Party, (b) the Using Party will do nothing inconsistent with such ownership, (c) all goodwill accruing from the use of such Marks will inure to the sole benefit of and be on behalf of the Owning Party, (d) it will use the Owning Party’s Marks in accordance with any guidelines for the use of such Marks as provided by the Owning Party from time to time, (e) it will not alter any such Marks and will use only exact reproductions thereof as supplied by the Owning Party, except where permitted by this Agreement, and (f) at the Owning Party’s reasonable request, all depictions of such Marks which the Using Party intends to use will be submitted to the Owning Party for approval of design, color, or other details. 3.4 No Other Licenses. Except as specifically provided in this Agreement, neither party grants the other any right or license, express or implied, in its Intellectual Property Rights. 4. USE OF THE HOSTED SERVICES 4.1 Use of the Hosted Services. Subject to the terms and conditions of this Agreement, Zeppelin grants to Subscriber a limited, worldwide, non-exclusive, non-transferable (except as permitted in Section 12.4) right to use the Hosted Services solely as integrated by Zeppelin into the Subscriber Websites. Subscriber’s right to use the Hosted Services is subject to, and contingent upon Subscriber’s compliance with, the Scope Limitations. 4.2 Use Restrictions. Except as otherwise explicitly provided in this Agreement or as may be expressly required or permitted by applicable law or court order, Subscriber will not, and will not permit or authorize third parties to: (a) rent, lease, or otherwise permit third parties to use the Hosted Services; (b) use the Hosted Services to provide services to third parties (e.g., as a service bureau); nor (c) circumvent or Attachment 3 C4 - 29 2 disable any security or other technological features or measures of the Hosted Services, except as required by law or court order. 4.3 Protection against Unauthorized Use. Subscriber will use reasonable efforts to prevent any unauthorized use of the Hosted Services and immediately notify Zeppelin in writing of any unauthorized use that comes to Subscriber’s attention. If there is unauthorized use by anyone who obtained access to the Hosted Services directly or indirectly through Subscriber, Subscriber will take all steps reasonably necessary to terminate the unauthorized use. Subscriber will cooperate and assist with any actions taken by Zeppelin to prevent or terminate unauthorized use of the Hosted Services. 4.4 Reservation of Rights. Zeppelin grants to Subscriber a limited right to use the Hosted Services under this Agreement. Subscriber will not have any rights to the Hosted Services except as expressly granted in this Agreement. Zeppelin reserves to itself all rights to the Hosted Services not expressly granted to Subscriber in accordance with this Agreement. 5. FEES AND PAYMENT 5.1 Fees and Payment Terms. Fees shall be due as indicated on Exhibit A and Exhibit B or any subsequently agreed to Statement of Work. Such fees shall be invoiced, to Subscriber as indicated on an applicable Statement of Work, when they incur and payment of such fees shall be due within thirty (30) days of the invoice unless a notice of rejection pursuant to Section 2.2 above is provided. Any amount not paid when due will be subject to finance charges equal to 1.5% of the unpaid balance per month or the highest rate permitted by applicable law, whichever is less. 5.2 Taxes. Subscriber will bear all taxes, duties, and other governmental charges (collectively, “taxes”) resulting from its receipt of the Professional Services or use of the Hosted Services. The fees paid under this Agreement include full compensation for all taxes that Zeppelin is required to pay. Zeppelin will be responsible for any other taxes or fees resulting from its performance of this Agreement, including without limitation, income, property, and employment taxes. 6. TERM AND TERMINATION 6.1 Term. This Agreement will commence upon the Effective Date and continue for the initial term specified in Exhibit A unless this Agreement is terminated earlier in accordance with the terms of this Agreement. 6.2 Termination for Material Breach or Non-Appropriation of Funds. In the case that either party is not complying with terms of this Agreement, the other party may notify the party of such defect or failure to perform and give such party thirty (30) days to cure the breach or deficiency. If the breach or deficiency is not cured within thirty (30) days the other party may terminate the Agreement immediately by providing written notice. In the event Subscriber cannot or does not appropriate funding sufficient to continue the Agreement as the result of unforeseen fiscal constraints, Subscriber may terminate the Agreement upon 30 days’ notice to Zeppelin provided however that in the case that Subscriber terminates due to unforeseen fiscal constraints, it agrees to pay Zeppelin an early termination fee equal to the amount that would be due if the next applicable milestone described on Exhibit B attached hereto had been reached less any offset Subscriber would be entitled to pursuant to this Agreement. 6.3 Post-Termination Obligations. If this Agreement is terminated by either party, Subscriber will pay Zeppelin for any Fees earned up to the day it received notice of the Subscriber's intent to terminate the Agreement less any offset from such Fees representing the Subscriber's damages from such breach and Zeppelin will provide commercially reasonable support to Subscriber, at Zeppelin’s then- current rates for such services, to migrate away from Zeppelin’s infrastructure the hosting and operation of the Hosted Services to which Subscriber is licensed. 7. WARRANTIES AND DISCLAIMER 7.1 Mutual Warranties. Each Party represents and warrants to the other that: (a) this Agreement has been duly executed and delivered and constitutes a valid and binding agreement enforceable against such Party in accordance with its terms; and (b) no authorization or approval from any third party is required in connection with such Party’s execution, delivery, or performance of this Agreement. Zeppelin warrants to Subscriber that Zeppelin will provide the Professional Services to Subscriber in a professional manner consistent with specifications provided herein. Zeppelin warrants to Subscriber that the Hosted Services will materially conform to the applicable specifications set forth herein. Zeppelin also warrants that its Hosted Services technology does not infringe on any third-party intellectual property rights and that no third party has a claim of such infringement currently against Zeppelin. 7.2 Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, ZEPPELIN MAKES NO ADDITIONAL REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW), OR STATUTORY, AS TO ANY MATTER WHATSOEVER. ZEPPELIN EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUALITY, ACCURACY, AND TITLE. ZEPPELIN DOES NOT WARRANT AGAINST INTERFERENCE WITH THE ENJOYMENT OF THE HOSTED SERVICES. ZEPPELIN DOES NOT WARRANT THAT THE HOSTED SERVICES ARE OR WILL BE ERROR-FREE OR THAT OPERATION OF THE HOSTED SERVICES WILL BE SECURE OR UNINTERRUPTED. ZEPPELIN EXERCISES NO CONTROL OVER AND EXPRESSLY DISCLAIMS ANY LIABILITY ARISING OUT OF OR BASED UPON THE RESULTS OF SUBSCRIBER’S USE OF THE HOSTED SERVICES. 8. CONFIDENTIALITY 8.1 Each Party agrees that it shall: (i) maintain all confidential, non-public or proprietary information, trade secrets and all documentation related thereto received from the other Party in confidence (“Confidential Information”); (ii) exercise at least the same degree of care to safeguard the Confidential Information of the other Party that it uses to safeguard its own Confidential Information (but not less than reasonable care); (iii) not, directly or indirectly, disclose the Confidential Information of the other Party to any third party unless expressly authorized by the other Party in a prior signed writing; and (iv) except as permitted hereunder, not use the Confidential Information of the other Party for its benefit or the benefit of any third party. All Confidential Information shall remain the property of the Party providing the Confidential Information and shall be returned to the providing Party upon written request or termination of this Agreement. Without limiting the foregoing, the Parties agree that, as between Zeppelin and Subscriber, all technology in and to the Hosted Services are the Confidential Information of Zeppelin. Without limiting the foregoing, Subscriber agrees not to disclose to any third party information regarding Zeppelin’s specific implementation of Hosted Services for Subscriber. The receiving Party shall have the right to share the existence and nature of this Agreement with potential investors or acquirers, or with such Party’s attorneys, accountants, bankers, or other professional advisors in connection with a financing, merger, acquisition, corporate reorganization, consolidation, or sale of all or substantially all of its assets, or as required by law. 8.2 Neither Party, however, shall have any obligation with respect to Confidential Information that: (i) is or becomes generally known to the public other than as a result as acts by the receiving Party; (ii) is independently developed by the receiving Party, as demonstrated by written evidence; (iii) is known to the receiving Party prior to its receipt from the other Party, as demonstrated by written evidence; (iv) is disclosed to the receiving Party by a third party who has no duty of confidentiality to the other Party, on a non-confidential basis and not in violation of any confidentiality agreement; or (v) is required to be disclosed by lawful process, provided that the requested Party shall provide the other Party with timely notice in order for that Party to seek a protective order or otherwise object. 8.3 Zeppelin shall have the right to use the Residuals. “Residuals” means information of a general nature (e.g. general skills know-how and expertise) that is gained during the course of Agreement and retained in the unaided memory of persons so long as they acquire and apply such information without disclosure of any Confidential Information of Subscriber. For the avoidance of doubt, nothing set forth in this Agreement shall limit Zeppelin’s right to provide services similar to or the same as the Hosted Services and Professional Services to third parties, subject to the protection of Subscriber’s Confidential Information. 9. INTELLECTUAL PROPERTY INFRINGEMENT 9.1 Defense. Zeppelin will, at its expense, either defend Subscriber from or settle any claim, proceeding, or suit (“Claim”) brought by a third party against Subscriber alleging that Subscriber’s use of the Attachment 3 C4 - 30 3 Hosted Services infringes or misappropriates any patent, copyright, trade secret, trademark, or other intellectual property right during the term of this Agreement if or for any third party Claim resulting from a breach of the provisions of this Agreement if: (a) Subscriber gives Zeppelin prompt written notice of the Claim; (b) Subscriber grants Zeppelin full and complete control over the defense and settlement of the Claim; (c) Subscriber provides assistance in connection with the defense and settlement of the Claim as Zeppelin may reasonably request; and (d) Subscriber complies with any settlement or court order made in connection with the Claim (e.g., relating to the future use of any infringing Hosted Services). Subscriber will not defend or settle any Claim without Zeppelin’s prior written consent. Subscriber will have the right to participate in the defense of the Claim at its own expense and with counsel of its own choosing, but Zeppelin will have sole control over the defense and settlement of the Claim. 9.2 Indemnification. Zeppelin will indemnify Subscriber from and pay (a) all damages, costs, and attorneys’ fees finally awarded against Subscriber in any Claim under Section 9.1; (b) all out-of-pocket costs (including reasonable attorneys’ fees for an attorney of Subscriber's choosing) reasonably incurred by Subscriber in connection with the defense of a Claim under Section 9.1 (other than attorneys’ fees and costs incurred without Zeppelin’s consent after Zeppelin has accepted defense of the Claim); and (c) all amounts that Zeppelin agrees to pay to any third party to settle any Claim under Section 9.1. 9.3 Exclusions from Obligations. Zeppelin will have no obligation under this Section 9 for any infringement or misappropriation to the extent that it arises out of or is based upon (a) use of the Hosted Services in combination with other products or services if Zeppelin first establishes that such infringement or misappropriation would not have arisen but for such combination; (b) the Hosted Services are provided to comply with designs, requirements, or specifications required by or provided by Subscriber, if the alleged infringement or misappropriation would not have arisen but for the compliance with such designs, requirements, or specifications; (c) use of the Hosted Services by Subscriber for purposes not intended or outside the scope of the license granted to Subscriber; (d) Subscriber’s failure to use the Hosted Services in accordance with written instructions provided by Zeppelin, if the infringement or misappropriation would not have occurred but for such failure; or (e) any modification of the Hosted Services not made or authorized in writing by Zeppelin where such infringement or misappropriation would not have occurred absent such modification. 10. SUBSCRIBER INDEMNIFICATION 10.1 Defense. Subscriber will defend Zeppelin from any actual third party Claim arising out of or based upon Subscriber’s breach of any of the provisions of this Agreement if: (a) Zeppelin gives Subscriber prompt written notice of the Claim; (b) Zeppelin grants Subscriber full and complete control over the defense and settlement of the Claim; (c) Zeppelin provides assistance in connection with the defense and settlement of the Claim as Subscriber may reasonably request; and (d) Zeppelin complies with any settlement or court order made in connection with the Claim. Zeppelin will not defend or settle any Claim without Subscriber’s prior written consent. Zeppelin will have the right to participate in the defense of the Claim at its own expense and with counsel of its own choosing, but Subscriber will have sole control over the defense and settlement of the Claim. 10.2 Indemnification. Subscriber will indemnify Zeppelin from and pay (a) all damages, costs, and attorneys’ fees finally awarded against Zeppelin in any Claim under Section 10.1; (b) all out-of-pocket costs (including reasonable attorneys’ fees) reasonably incurred by Zeppelin in connection with the defense of a Claim under Section 10.1 (other than attorneys’ fees and costs incurred without Subscriber’s consent after Subscriber has accepted defense of the Claim); and (c) all amounts that Subscriber agrees to pay to any third party to settle any Claim under Section 10.1. 11. LIMITATIONS OF LIABILITY 11.1 Disclaimer of Indirect Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, NEITHER PARTY WILL, UNDER ANY CIRCUMSTANCES, BE LIABLE TO THE OTHER FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO LOST PROFITS OR LOSS OF BUSINESS, EVEN IF THE OTHER PARTY IS APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING. 11.2 Cap on Liability. EXCEPT AS CONTEMPLATED AND/ OR PROVIDED IN SECTIONS 9 AND 10, UNDER NO CIRCUMSTANCES WILL ZEPPELIN’S TOTAL LIABILITY OF ALL KINDS ARISING OUT OF OR RELATED TO THIS AGREEMENT (INCLUDING BUT NOT LIMITED TO WARRANTY CLAIMS), REGARDLESS OF THE FORUM AND REGARDLESS OF WHETHER ANY ACTION OR CLAIM IS BASED ON CONTRACT, TORT, OR OTHERWISE, EXCEED THE TOTAL AMOUNT PAID BY SUBSCRIBER TO ZEPPELIN DURING THE 12 MONTHS IMMEDIATELY PRECEDING THE CLAIM (DETERMINED AS OF THE DATE OF ANY FINAL JUDGMENT IN AN ACTION). 11.3 Independent Allocations of Risk. EACH PROVISION OF THIS AGREEMENT THAT PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES, OR EXCLUSION OF DAMAGES IS TO ALLOCATE THE RISKS OF THIS AGREEMENT BETWEEN THE PARTIES. THIS ALLOCATION IS REFLECTED IN THE PRICING OFFERED BY ZEPPELIN TO SUBSCRIBER AND IS AN ESSENTIAL ELEMENT OF THE BASIS OF THE BARGAIN BETWEEN THE PARTIES. EACH OF THESE PROVISIONS IS SEVERABLE AND INDEPENDENT OF ALL OTHER PROVISIONS OF THIS AGREEMENT. THE LIMITATIONS IN THIS SECTION 11 WILL APPLY NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY IN THIS AGREEMENT. 12. GENERAL 12.1 Insurance. Zeppelin shall comply with the insurance requirements specified in Schedule 12.1. 12.2 Business Tax. Zeppelin must have a valid City of San Luis Obispo business tax certificate before, or within a reasonable time following, execution of the contract. Additional information regarding Subscriber's business tax program may be obtained by calling (805) 781- 7134. 12.3 Relationship. Each Party will be and act as an independent contractor (and not as the agent or representative) of the other Party in the performance of this Agreement. 12.4 Assignability. Neither Party may assign its rights, duties, and obligations under this Agreement without the other Party’s prior written consent. 12.5 Use of Contractors. Zeppelin may retain third parties (“Contractors”) to furnish services to it in connection with the performance of its obligations hereunder and permit such Contractors to have access to Subscriber’s Confidential Information on a need to know basis, but only to the extent and insofar as reasonably necessary to discharge Zeppelin’s obligations under this Agreement; provided that all such Contractors shall be required by Zeppelin to execute a written agreement (i) sufficient to secure compliance by the Contractors with Zeppelin’s obligations of confidentiality concerning Confidential Information set forth in this Agreement; (ii) acknowledging the Contractor’s obligation to assign all work product in connection with performance hereunder; and (iii) effecting assignments of all Intellectual Property Rights concerning the Services to Subscriber or Zeppelin, as appropriate. Subscriber's consent to the use of a contractor shall not relieve Zeppelin of any liability or obligation hereunder, and Zeppelin shall be responsible and liable for all acts, omissions, defaults, negligence or willful misconduct of any such Contractor and for such Contractor’s compliance with the terms and conditions of this Agreement. Zeppelin is responsible for the supervision, direction, control, and compensation of its employees and permitted Contractors. Subscriber, upon request, may review such agreements at any time before or after execution by such Contractors to ensure compliance with this Agreement. 12.6 Immigration Act of 1986. Zeppelin warrants on behalf of itself and all Contractors engaged for the performance of this work that only persons authorized to work in the United States (or in the location where such Contractor is engaged) pursuant to the Immigration Reform and Control Act of 1986 and other applicable laws shall be employed in the performance of the work hereunder. 12.7 Non-Discrimination. In the performance of this Agreement, Zeppelin agrees that it will not engage in, nor permit such employees or Contractors as it may employ, to engage in discrimination in employment of persons because of age, race, color, sex, national origin or ancestry, sexual orientation, or religion of such persons. Attachment 3 C4 - 31 4 12.8 Interests of Zeppelin. Zeppelin covenants that it presently has no interest, and that during the Term of this Agreement it shall not acquire any interest—direct, indirect or otherwise—that would conflict in any manner or degree with the performance of the work hereunder. Zeppelin further covenants that, in the performance of this Agreement, no Contractor or person having such an interest shall be employed. Zeppelin certifies that no one who has or will have any financial interest in performing this work is an officer or employee of Subscriber. It is hereby expressly agreed that, in the performance of the work hereunder, Zeppelin shall at all times be deemed an independent contractor and not an agent or employee of Subscriber. 12.9 Notices. Any notice required or permitted to be given in accordance with this Agreement will be effective if it is in writing and sent by certified or registered mail, or insured courier, return receipt requested, to the appropriate Party at the address set forth on the signature page of this Agreement and with the appropriate postage affixed. Either Party may change its address for receipt of notice by notice to the other Party in accordance with this Section 12.9. Notices are deemed given five (5) business days following the date of mailing or one business day following delivery to a courier. 12.10 Compliance with Laws. Each Party will, at its cost and expense, obtain all necessary regulatory approvals, licenses, and permits applicable to its business and comply with all laws applicable to its business and/or the performance of its obligations under this Agreement, as such laws may be revised from time to time. Specifically, Zeppelin shall be responsible for ensuring the Hosted Services maintain compliance with Payment Card Industry Data Security Standards (PCI DDS), California Online Privacy Protection Act of 2003 (OPPA), the CAN-SPAM Act, and Health Insurance Portability and Accountability Act (HIPAA) (to the extent it applies). 12.11 Restriction on Motor Vehicle Use. Zeppelin has represented and hereby agrees that no motor vehicles will be operated by Zeppelin agents, representatives, employees or contractors in performance of this Agreement. If, in breach of this provision, Zeppelin representatives, agents, employees or contractors utilize motor vehicles in performance of this Agreement, in addition to the remedies provided in this Agreement and by law, Zeppelin shall defend Subscriber from any Claim arising out of the use of a motor vehicle by a Zeppelin agent, representative, contractor or employee in performance of this Agreement. Zeppelin shall also indemnify Subscriber from and pay (a) all damages, costs, and attorneys’ fees finally awarded against Zeppelin in any Claim regarding the use of a motor vehicle by a Zeppelin agent, representative, contractor or employee in performance of this Agreement. 12.12 Force Majeure. Neither Party will be liable for, or be considered to be in breach of or default under this Agreement on account of, any delay or failure to perform as required by this Agreement as a result of any cause or condition beyond its reasonable control, so long as that Party uses all commercially reasonable efforts to avoid or remove the causes of non-performance. 12.13 Governing Law. This Agreement will be interpreted, construed, and enforced in all respects in accordance with the local laws of the State of California, without reference to its choice of law rules and not including the provisions of the 1980 U.N. Convention on Contracts for the International Sale of Goods. Each Party hereby irrevocably consents to the exclusive jurisdiction and venue of the federal, state, and local courts in the County of San Luis Obispo, California in connection with any action arising out of or in connection with this Agreement. 12.14 Waiver. The waiver by either Party of any breach of any provision of this Agreement does not waive any other breach. The failure of any Party to insist on strict performance of any covenant or obligation in accordance with this Agreement will not be a waiver of such Party’s right to demand strict compliance in the future, nor will the same be construed as a novation of this Agreement. 12.15 Severability. If any part of this Agreement is found to be illegal, unenforceable, or invalid, the remaining portions of this Agreement will remain in full force and effect. If any material limitation or restriction on the use of the Hosted Services under this Agreement is found to be illegal, unenforceable, or invalid, Subscriber’s right to use the Hosted Services will immediately terminate. 12.16 Counterparts. This Agreement may be executed in any number of identical counterparts, notwithstanding that the Parties have not signed the same counterpart, with the same effect as if the Parties had signed the same document. All counterparts will be construed as and constitute the same agreement. This Agreement may also be executed and delivered by facsimile and such execution and delivery will have the same force and effect of an original document with original signatures. 12.17 Entire Agreement. This Agreement, including all exhibits and Statements of Work, is the entire agreement between the Parties regarding the subject matter hereof, and replaces and supersedes all prior oral and written agreements regarding the subject matter hereof. No usage of trade or other regular practice or method of dealing between the Parties will be used to modify, interpret, supplement, or alter the terms of this Agreement. This Agreement may be changed only by a written agreement signed by an authorized agent of the Party against whom enforcement is sought. Zeppelin will not be bound by, and specifically objects to, any term, condition, or other provision that is different from or in addition to this Agreement (whether or not it would materially alter this Agreement) that is proffered by Subscriber in any receipt, acceptance, confirmation, correspondence, proposal, or otherwise, unless Zeppelin specifically agrees to such provision in writing and signed by an authorized agent of Zeppelin. “Zeppelin” “Subscriber” Zeppelin, Inc. City of San Luis Obispo Name: Name: Title: Title: Signature: Signature: Date: Date: Address: Address: Contact Telephone: Contact Telephone: Attachment 3 C4 - 32 Schedule 12.1 - 1 SCHEDULE 12.1 INSURANCE 1. Insurance Requirements. Zeppelin shall provide proof of insurance in the form, coverages and amounts specified in this Schedule as a precondition to contract execution. Zeppelin shall procure and maintain, for the duration of the Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Zeppelin, its agents, representatives, employees or Contractors. 2. Minimum Scope of Insurance. Coverage shall be at least as broad as: (a) Insurance Services Office Commercial General Liability coverage (occurrence form CG 20 10 Prior to 1993 or CG 20 10 07 04 with CG 20 37 10 01 or the exact equivalent as determined by Subscriber). (b) Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance. (c) Errors and Omissions Liability insurance as appropriate to the consultant's profession. 3. Minimum Limits of Insurance. Zeppelin shall maintain limits no less than: (a) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. (b) Employer's Liability: $1,000,000 per accident for bodily injury or disease. (c) Errors and Omissions Liability: $1,000,000 per occurrence. 4. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by Subscriber. At the option of Subscriber, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects Subscriber, its officers, officials, employees and volunteers; or the Zeppelin shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses. 5. Other Insurance Provisions. The general liability policy is to contain, or be endorsed to contain, the following provisions: (a) The City, its officers, officials, employees, agents and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of Zeppelin; products and completed operations of the Zeppelin; premises owned, occupied or used by the Zeppelin.. The coverage shall contain no special limitations on the scope of protection afforded to Subscriber, its officers, official, employees, agents or volunteers. (b) For any claims related to this project, Zeppelin's insurance coverage shall be primary insurance as respects Subscriber, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by Subscriber, its officers, officials, employees, agents or volunteers shall be excess of Zeppelin's insurance and shall not contribute with it. (c) Zeppelin's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. (d) Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to Subscriber. 6. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII. 7. Verification of Coverage. Zeppelin shall furnish Subscriber with a certificate of insurance showing maintenance of the required insurance coverage. Original endorsements effecting general liability coverage required by this clause must also be provided. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by Subscriber before work commences. Attachment 3 C4 - 33 Exhibit A - 1 EXHIBIT A HOSTED SERVICES AND FEES 1. Hosted Services. The Hosted Services are a single instance of Zeppelin’s hosted travel-accommodation booking engine, currently referred to as “Helium,” as implemented and made available by Zeppelin in accordance with the Professional Services and accessible by or through one or more Subscriber Websites. The Hosted Services will, at minimum, provide the following features and capabilities when integrated into the Subscriber Websites as indicated on Appendix 1, attached hereto. 2. Term. The term of this Agreement will be a period of five years commencing on the Effective Date (“Term”). 3. Scope Limitations. (a) The Subscriber Websites may only be made available to end users through the following domain names (and their subdomains), which list of domain names may be updated from time to time by the Parties: (i) SANLUISOBISPOVACATIONS.COM; and (ii) the natural shortening or abbreviation of the preceding URLS (e.g. SLOVacays.com). (b) A Subscriber Website may only provide booking capabilities for hotels and other accommodations located within the city limits of San Luis Obispo or which accommodations are otherwise subject to the taxing authority of the Tourism Business Improvement District of the City of San Luis Obispo (“TBID”). 4. Support. Zeppelin will provide maintenance services to Subscriber at no additional cost. Support will include software updates, security patches, bug fixes, platform compliance, platform expansion when necessary (or at Zeppelin’s election), and Subscriber and property owner user support. 5. Fees. There is no additional fee charged by Zeppelin for the continued operation and support of the Hosted Services as provided by Zeppelin under this Agreement. Attachment 3 C4 - 34 APPENDIX 1 HOSTED SERVICES SPECIFICATION Zeppelin Represents and warrants that the Professional Services will result in the Hosted Services providing the following features and capabilities when integrated into the Subscriber Websites: • Property management tools (Back end): o Provide property owners and their credentialed property managers the ability to manage, in real time, property inventory, availability, pricing, bookings, features, amenities, photos, descriptions and contact information. o Provide tiered access capability for Admin, Super User and User accounts. o Provide TBID Admin functionality for adding of new constituent/property owner accounts. o Populate with available inventory and availability if the property’s existing software systems provide an API to do so. o Offer the ability to manually input and manage inventory if the property does not have the ability to do so. o Provide reporting tools offering reports that may be customized by property owners, managers and TBID representatives. o Includes training for property owners and managers. o Subscriber has access to each property owner’s report and aggregate reports (for instance, Subscriber can review a report of total inventory and availability. • Property search and booking tools (Front end) o Provide tools for site visitors of the SLO TBID’s website to browse and search SLO TBID properties and to book lodging stays from said properties within the site.  Site visitors may search and filter properties by type, amenities, pricing, and travel dates. o Provide individual property pages for each of the SLO TBID’s properties. o Include a call-to-action/booking widget (or similar functionality) that constituents may embed in their properties websites. o Provide integration of constituent’s standard payment processing accounts into the Hosted Services. o Provide content and functionality to be optimized for display on mobile devices. o Zeppelin will provide Helium integration services into the Subscriber Website without requiring changes to the layout, look, feel, or organization of the Subscriber Website (unless agree to in writing by Subscriber). Attachment 3 C4 - 35 Exhibit B - 1 EXHIBIT B PROFESSIONAL SERVICES AND FEES 1. Professional Services. (a) Implementation Services. Implement and integrate the Hosted Services with the applicable Subscriber Websites, in accordance with the specifications set forth in Exhibit A and the attached Appendix 1 (“Implementation Services”). (b) Marketing Services. Zeppelin will use commercially reasonable efforts to promote and market the Subscriber Websites, with a goal of meeting the following aggregate targets across all Subscriber Websites: Objective Target Aggregate advertising impressions promoting the Subscriber Websites in the first 12 months of the Initial Term. 2,500,000 Aggregate website visits to the Subscriber Websites in the first 12 months of the Initial Term 25,000 Aggregate number of bookings for any travel inventory on the Subscriber Websites in the first 12 months of the Initial Term 1,200 (i) Subscriber shall have the right to review and approve e-mails and targeted ads 5 days prior to sending and/or public display or distribution. (ii) In the event Zeppelin breaches its marketing services obligations pursuant to this Section 1(b) of Exhibit B (“Marketing Services”), Zeppelin’s sole and exclusive liability shall be for Zeppelin to re-perform, at no additional cost, the deficient Marketing Services for the subsequent 12 months. Subscriber in its sole discretion at its convenience may terminate the Agreement if the marketing services objectives set forth herein are not met following the completion of the first twelve (12) months of services. (c) Hosting and Operation of Subscriber Website. Zeppelin acknowledges that, during the period of implementation by Zeppelin of the Hosted Services on the Subscriber Websites, the Subscriber may go through a change of contract for its marketing agency of record (the current marketing agency has been hosting, maintaining and updating the Subscriber Websites). In the event that Subscriber’s new marketing agency is unable to provide such hosting and maintenance services with respect to Subscriber Websites, Subscriber may request Zeppelin, and Zeppelin may elect in its sole discretion, to take on such responsibilities for hosting and maintaining the Subscriber Websites. If Zeppelin so elects, Zeppelin would require a minimum 10 days’ prior written notice of the intent to transfer responsibility to Zeppelin and Zeppelin shall then provide such hosting and maintenance services with respect to Subscriber Websites for no more than 90 days from the date of transfer of responsibility to Zeppelin. In such event, Zeppelin shall include 5 hours per week of maintenance services at no cost, provided that all additional hours of Zeppelin services in any given week shall be billed by Zeppelin at the rate of $150/hour, and Subscriber agrees to promptly pay to Zeppelin all such amounts invoiced by Zeppelin. Upon the completion of the Implementation Services and Subscriber commencing business with its new marketing agency, Zeppelin will, upon written request from Subscriber of no less than 30 days, transfer and turn over control of the applicable Subscriber Website to the new agency of record; provided, however, that Zeppelin may cease hosting such Subscriber Website immediately if the new marketing agency is not in place within a 90-day period. 2. Fees. $135,000 to be paid by Subscriber promptly upon delivery or completion by Zeppelin of the applicable milestone or deliverable detailed below: Milestone Deliverable Target Due Date Payment Due Upon Acceptance #1 - Project Commencement Agreement is executed n/a $13,500 #2 - Project Development Documentation Parties agree on technical design documents 8 weeks from Effective Date $40,500 #3 - Project Feature Complete / QA Commencement Demonstration by Zeppelin of features of Hosted Services 6 weeks from delivery of milestone #2 $40,500 #4 - QA Complete / Launch Zeppelin notifies Subscriber of completion of integration of Hosted Services with one or more Subscriber Websites and 2 weeks from delivery of milestone #3 $27,000 Attachment 3 C4 - 36 Exhibit B - 2 readiness for public launch. #5 – Project Completion No further deliverable is owed by Zeppelin, and this milestone shall be deemed delivered and complete on the date that is 2 calendar weeks from delivery of milestone #4. 2 weeks from delivery of milestone #4 $13,500 TOTAL $135,000 3. Contacts. (a) The following are the primary contacts of each party: Organization Name, Title Work Number Email Address Zeppelin City of San Luis Obispo TBID (b) The following are the technical contacts of each party: Organization Name, Title Work Number Email Address Zeppelin City of San Luis Obispo TBID Attachment 3 C4 - 37 2014-15 Budget Allocation Recommended by the Tourism Business Improvement District Board Campaign Elements/Contractors Workscope Budget Allocation BCA/StudioGood General Marketing Services $ 650,000 SLO Chamber of Commerce TBID-Specific Telephone Fulfillment & Availability Assistance $ 28,000 Visit San Luis Obispo County General Contribution for marketing plan execution inclusive of Membership $ 105,000 Zeppelin Technology Inc Helium - Booking Engine $ 121,500 Smith Travel Research Monthly in-county data comparison $ 1,500 Central Coast Tourism Council Membership $ 1000 Cal Poly Athletics Partnership for 2014-15 Sponsorship & Room Costs $95,500 SLO Wine Association Partnership & Room Costs $11,000 Event Promotion General Event Promotion $107,501 Tradeshows Travel & Adventure Shows Materials for the Shows Industry Conferences $30,500 Tourism Expenses $2,500 Total Expenditure $1,154,001 * Does not include Tourism Manager Staffing & Administration Overhead Fees 2014-15 Proposed Budget $1,232,774 (2013-15 Financial Plan Supplement page C-5) ** The un-appropriated fund balance will not be known until the entire 2014-15 collection has occurred and the City’s audit has been substantially completed. Attachment 4 C4 - 38 2014-15 Budget Allocation Recommended by the Promotional Coordinating Committee Campaign Elements/Contractors Workscope Budget Allocation Grants-in-Aid Funding Direct Grant Allocations (based on applications received) Grant Support Program $ 90,000 $ 25,000 Events & Activities Direct Events & Activities Allocations (based on applications received) Events & Activities Support Program $ 48,000 $ 32,000 SLO Chamber of Commerce Visitors Center Services Operate a Visitors Center in downtown San Luis Obispo to assist tourists with information about tourist attractions and hotel availability. Downtown Maps $ 95,000 $ 8,000 PR Comprehensive program for proactive and reactive Public Relations $ 58,000 Beautification initial funding $ 1,000 Program Support $ 5,000 Total Expenditure $ 362,000 * Does not include Tourism Manager Staffing Community Promotions Proposed Budget 2014-15 $388, 200 (2013-15 Financial Plan Supplement page C-5) Attachment 4 C4 - 39 Promotional Coordinating Committee Meeting Minutes Wednesday, May 14, 2014 5:30 pm at City Hall CALL TO ORDER: Vice Chair Sasha Palazzo PRESENT: Cox, Franciskovich, Levi STAFF PRESENT: Molly Cano, Tourism Manager Meeting to order at 5:33 pm CONSENT AGENDA ACTION: Moved by Cox/ Franciskovich to approve the consent agenda. Motion carried 4:0 BUSINESS ITEMS 1. WAYFINDING PROGRAM UPDATE City Engineer, Bridget Fraser, presented a program update on the Wayfinding Sign status. She provided a brief background on the history of the project then presented the current status. The projects nine prototype signs, a mix of vehicular and pedestrian signs, have been installed around downtown and the City is currently collecting feedback over the next 6 weeks to determine changes necessary for the permanent sign fabrication and installation. First project permanent install is expected in Spring 2015. Next project that is beginning is the downtown orientation maps- design should being mid-summer. The third project of focus currently is the monument sign. This project was originally anticipated to be funded through a grant with SLOCOG, however the estimated costs exceed expectation so funds are being requested from the City for the project. SLOCOG has requested $100,000 from the City of SLO to cover our portion of the monument sign project. Fraser noted that staff recommended that $55,000 come from the Wayfinding Sign project budget. Fraser presented the committee with an option of where these shortfall funds could come from including the design and construction budgets for the directional signage. The reaming $45,000 would come from the completed projects fund and the remaining city gateway design fund. The impact of this transfer would be the reduction in 5-7 directional signs from the complete project. The committee discussed the request at great length. They were supportive of the transfer in order to complete the monument sign project however; the committee was particularly concerned with having the funds replaced in the budget when new funding becomes available so the project could be completed as originally planned. They also requested to prioritize that any returned funds from the $100,000 estimated costs for the monument project, be returned to the directional signage budget and if the project doesn’t move fowrad that the funds are returned to the originally intended budgets. ACTION: Moved by Levi/Cox to support the recommendation to City Council to approve funding transfers totaling $100,000 to the City Gateways project account as follows: $55,000 from the Directional Sign Program project account; $28,000 from the Completed Projects account; $17,000 from the City Gateways design account; and, to approve a $100,000 match as requested by the San Luis Obispo Council of Governments in support of construction of the Highland Entry Monument DRAFT Attachment 5 C4 - 40 Promotional Coordinating Committee Minutes Page 2 project. With the condition that if the project doesn’t move forward the funds are to be returned to the directional signage budget; the request for the funds to be restored in the next budget cycle; and when new funds become available for the Wayfinding Sign program they are restored to the Directional Sign program account. Motion carried 4:0 2. 2014-15 BUDGET The committee discussed the budget allocations for the 2014-15 fiscal year. With the initial allocations to programs and contracts in order to maintaining the current workscopes, the budget showed a $10,000 deficit. This deficit is attributed in part to increased percentage of staffing costs the PCC contributes for the Tourism Manager. The committee discussed reducing program allocations in order to reduce the overall deficit but was concerned with cutting back programs since their budget is already lean. The committee also discussed the status of the current year budget and the estimated $10,000 in available funds remaining. The committee discussed the importance of beginning the contract for the new media monitoring tool ($7000) as soon as possible in order to capture the media results during the peak travel season. The committee then discussed the request to carryover the remaining 2013-14 budget for the use of Event and Activities funding to enhance the SLO Happenings app and/or provide additional non-GIA event sponsorship grants. If this carryover is not approved than the committee discussed making the remaining reductions of $3000 from the 2014-15 beautification program. ACTION: Moved by Franciskovich /Levi to: 1. Contract with Chamber of Commerce in the amount of $7000 from the 2013-14 remaining budget for the media monitoring tool. 2. To approve contracting with the Chamber of Commerce in 2014-15 for Public Relations, GIA Support, and downtown maps as presented. 3. To request the carryover of the remaining PCC 2013-14 budget for the purpose of enhancing the Events and Activities program in 2014-15. Should the request to carryover of funds not be granted, reduce the funds earmarked for the 2014-15 beautification program by $3000 to $1000. Motion carried 4:0 Attachment 5 C4 - 41 Promotional Coordinating Committee Minutes Page 3 Below are charts of the two budget scenarios as discussed and recommended by the PCC: 3. GRANTS-IN-AID – PRELIMINARY RECOMMENDATION The Grants-in-Aid Subcommittee presented the preliminary recommendations. The committee explained that each application was reviewed on its own for the funding consideration than the entire list was reevaluated as a whole to achieve the allocated funding level of $90,000 for PCC GIA. The subcommittee noted that 3 events were denied funding- one due to terming out, one due to the event not taking place in San Luis Obispo, and one because it does not meet the criteria of the grant. The Scenario 1- With Carry Over Notes IncomeProjected Budget 388,326$ Carryover $3,000 Total Income 391,326$ ExpensesGrants-in-Aid Program 90,000$ Committed GIA Contract w Chamber 25,000$ Events & Activities 80,000$ Earmark: $48k grants; $32k for 2015 SLO Happenings contract Visitors Center 95,000$ Committed: 2 yr contract PR Contract 58,000$ $58000 for PR Downtown Maps 8,000$ Beautification 4,000$ Support Cost 5,000$ Tourism Manager (15/20/25)26,326$ Committed Total Expenses 391,326$ Total (Defict)-$ Scenario 2- Without Carry Over Notes IncomeProjected Budget 388,326$ Carryover $0 Total Income 388,326$ ExpensesGrants-in-Aid Program 90,000$ Committed GIA Contract w Chamber 25,000$ Events & Activities 80,000$ Earmark: $48k grants; $32k for 2015 SLO Happenings contract Visitors Center 95,000$ Committed: 2 yr contract PR Contract 58,000$ $58000 for PR Downtown Maps 8,000$ Beautification 1,000$ Support Cost 5,000$ Tourism Manager (15/20/25)26,326$ Committed Total Expenses 388,326$ Total (Defict)-$ Attachment 5 C4 - 42 Promotional Coordinating Committee Minutes Page 4 commissioners discussed a concern of reduced funding for one grant applicant. The committee then reevaluated the funding level and adjusted grants accordingly to maintain the budgeted $90,000 for GIA. The committee will continue the review of the allocations at the Special Meeting and form the recommendation to Council at that meeting. The Special Meeting for the GIA recommendation is scheduled for May 22, 2014 at 5:30pm. COMMITTEE COMMUNICATION GIA Report: None. TBID Report: Staff updated the committee on the recent TBID meeting and reviewed the minutes included with the agenda. Tourism Program Update: Molly Cano presented the Tourism Program update on the following topics: -Visit California Receptive FAM May 19-24– Wednesday, 5/21 will be in SLO. Companies participating include:  Travalco  Cali¹Fun LLC  America 4 You LLC  Evergreen Escapes  Lion Tours  New World Travel -Media Visit- Thursday journalist working on an article about the mission trail for the SD Union Tribune -Marketing Contract for TBID – approved by Council at May 6 meeting -SLO Happenings app feedback from TBID hotels is VERY positive -Jazz Festival this weekend – all day Saturday in mission plaza Meeting adjourned at 7:06 pm Attachment 5 C4 - 43 Page intentionally left blank. C4 - 44